THORNEY TECHNOLOGIES LTD — Capital/Financing Update 2007

Aug 23, 2007

Friday 24 August 2007

ASX Release

Company Announcements Office Australian Stock Exchange Limited 10[th] Floor, 20 Bond Street SYDNEY NSW 2000

==> picture [107 x 233] intentionally omitted <==

Dear Sir/Madam,

SALES NEGOTIATION PROGRESS REPORT

Australian Renewable Fuels Limited (ASX Code ARW) (“ARF”) announces it has secured a significant order of more than 500,000 litres of biodiesel for delivery in September. The biodiesel will be produced and delivered from our Picton plant. ARF will satisfy this order with quality Australian standard biodiesel and believes this provides an opportunity for ongoing orders from this customer. A formal announcement of contract details will be made if ARF is able to convert this first order into a fixed term supply agreement.

A major oil company has terminated negotiations with ARF for the supply of biodiesel to the Western Australian retail service stations carrying its brand. The reason communicated to ARF was that the logistics of blending fuel at their Western Australian terminal are too complex. The selling price and biodiesel quality specifications, including a successful inspection of ARF plant by the oil company major, had been previously agreed. The oil company major had expected ARF to fund the upgrade of the terminal facilities to facilitate biodiesel blending with bulk mineral diesel and on this basis ARF was negotiating the financing of these facilities. Given the duration and intent of these negotiations, ARF will be pursuing further explanation of the “complexities” that need to be resolved.

ARF remains in negotiation with the same major oil company regarding a supply agreement from our Adelaide plant. This major oil company has advised ARF that completion of the supply agreement is dependent on terminalling logistics discussions with another oil major. ARF is also in the final stages of negotiating a supply agreement with this second major oil company. Again ARF has reached agreement on price and will deliver quality Australian standard biodiesel for blending to the Australian fuel standard. Also ARF has agreed in principle to finance all reasonable infrastructure costs on behalf of the oil majors to ensure that biodiesel can be made available to the South Australian public. ARF expects these negotiations to be completed by 15 September 2007. Given the sensitivity of these negotiations, ARF cannot provide further detail at this stage, but will do so as soon as possible after 15 September 2007.

Shareholders should note that ARF has made direct representations to various Ministers within the Australian government concerning the impact of the 2006 changes to the fuel tax legislation which reversed a previous policy that provided users of biodiesel with a fuel tax credit of 38 cents per litre. This policy change now forces the blending of biodiesel with mineral diesel at licensed blending sites generally controlled or directly tied to the major oil companies. There is no requirement on these major oil companies to take any product or develop any agreements with biodiesel producers. The impact of this government policy reversal has been severe. The lack of engagement of three of the major multinational fuel companies operating in Australia is demonstrated by their failure to date to take any commercial volume of biodiesel from any Australian producer anywhere in Australia.

FEEDSTOCK

The current high cost of feedstock is of continuing concern to ARF. ARF has a proven technology capable of using the cheapest feedstocks, being tallow and used cooking oil. Prices have retreated from the highs of a few months ago, and tallow at around $800 per metric tonne delivered is slightly lower than forecast in the ARF Open Briefing of 1 June. We are hopeful that a decline in price in the last quarter of 2008 will occur due to increased volumes of feedstock in the market. ARF has used significant quantities of used cooking oil in its Adelaide plant and is seeking additional supplies of this feedstock for both Adelaide and Picton.

POTENTIAL US INVESTMENT

ARF is pleased to announce it expects to proceed with a bankable feasibility study based on the commitments received from prospective investors in American Renewable Fuels Inc and its operating subsidiary AR Fuels LLC. Current investor commitments total US$1.9 million and two further potential investors are in the process of completing their due diligence.

The US market for biodiesel remains very positive for low cost producers. The US government with bipartisan support offers a US$ 1 per gallon blending credit and some state governments offer investment incentives, including land and headworks infrastructure grants and production credits of up to 18 cents per gallon. A number of states, including New Mexico where ARF Inc is conducting feasibility, have introduced progressive B5 mandates.

ARF expects to make a more formal announcement on its US strategy soon after 31 August 2007.

For further information, please contact:

Australian Renewable Fuels Limited John Lillywhite, CEO T: 08 9363 3500 E: info@arfuels.com.au

ENDS

Page : 2